Abstract WP10-04

Patxot, Concepció, Elisenda Renteria, Miguel Romero, and Guadalupe Souto. 2010. How Intergenerational Transfers Finance Lifecycle Deficit in Spain

In this chapter we present the estimates of the national transfers occurring among age groups in Spain in year 2000 using the NTA methodology proposed by Mason, Lee and others (2006). The life cycle deficit is positive –a surplus– for ages 27 to 57, while the rest of individuals become dependent, being the age reallocations of both age groups quite different. On the one hand, during childhood and youth, individual consumption is mainly financed by private transfers (69%) while public transfers only amount to a 32% being mainly in-kind transfers, through education and health systems. On the other hand, older people finance their lifecycle deficit mainly through asset-based reallocations (66%), followed by public transfers (41%, composed both of substantial cash transfers –retirement and survivor pensions– and in-kind health benefits).

Interestingly, we find that the elderly are net payers of private transfers, implying that they are transferring money or housing services to the young members of their family. This surprising result could be explained by the high proportion of co resident elderly. This together with the fact that all individuals aged more than 16 pay and receive private transfers at the same time indicates that private support and hence intergenerational sharing tends to be mutual in Spain, implying that Spain is half-way between the northern European countries and the Latin-American countries.

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